Who really killed Energy East?

Blame for Energy East pipeline spreads, but future projects will tell the ultimate story

It is always fascinating to watch politicians and activists try to score political points on the basis of decisions and outcomes that they ultimately had no control or influence over. It’s an endless scramble to take credit when things go “right” and lay blame when things go “wrong.”

Take, for example, the reaction from all fronts to the recent decision by TransCanada to cancel their plans for the Energy East pipeline. In their news release announcing the decision, TransCanada suggested that the cancellation came about as a result of undefined “changed circumstances.” That vagueness, of course, meant that everyone and their dog was quickly able to step up and explain to the rest of the world exactly what those changed circumstances were and who was responsible for them.

The federal Conservatives, never ones to miss an opportunity to play to their base in Alberta and Saskatchewan while bashing federal Liberals, lay absolutely all the blame for the cancellation at the feet of Justin Trudeau and his federal government.

“He should take responsibility, and explain why he wanted this project cancelled, instead of shifting the blame,” says Conservative leader Andrew Scheer in a Facebook post on the day of the announcement.

Alberta’s three UCP leadership hopefuls, predictably, were perfectly happy to lay all the blame for TransCanada’s decision on Premier Rachel Notley. “It’s a shameful moment in Canadian history, an attack on Alberta and a total failure of the NDP,” said Brian Jean in his statement, a sentiment that was shared by both Jason Kenney and Doug Schweitzer.

For her part, Notley delivered a very carefully worded statement expressing deep disappointment in the cancellation without directly blaming anyone. She did, however, make a passing indirect reference to the uncertainty created by the National Energy Board’s (NEB) announcement that they would be considering both upstream and downstream emissions when considering the pipeline’s impacts.

“The National Energy Board needs to send a clear message on what the future of project reviews look like in Canada,” says Notley’s statement, adding that, “Investors need confidence and we look forward to seeing that certainty in place soon.”

She also made sure to remind Albertans that her government has “supported Energy East since the project was proposed,” while doubling down on the now increased importance of Kinder Morgan’s proposed Trans Mountain Pipeline expansion.

Perhaps the only ones who didn’t lay at least some of the blame on the NEB’s changing mandate were environmental and indigenous activists both inside and outside Quebec. As much as these folks were busy celebrating the collapse of a pipeline they have opposed and organized against since its inception, they were also working very hard to claim credit for the decision.

“First Nations organizing leads to TransCanada ending its Energy East Pipeline and Eastern Mainline proposals,” read the headline on a press release jointly issued by Indigenous Climate Action and the Indigenous Environmental Network.

While it is likely true that activist resistance, Alberta’s oil sands emissions cap, and the changing NEB mandate were all things that TransCanada considered in its deliberations on the project, the reality is that none of them was the core reason for their ultimate decision.

TransCanada proposed Energy East at a time when oil was over $100 a barrel, the Keystone XL pipeline to the US was all but dead, and projections for growth in oil sands production were extremely rosy. Under those circumstances the Energy East pipeline made good economic and financial sense for the company, despite the more than valid critiques on environmental and indigenous justice grounds.

Every single one of those factors has changed for the worse now: Oil is hovering around $50 without much prospect for short-term improvement, Donald Trump has greatly improved the prospects for Keystone XL, and the production forecast for the oilsands has been reduced.

What all this means is that, not only will the shipping capacity of Energy East not be needed any time soon, but that going ahead on the project would result in a complete financial sink hole for the company.

Interestingly, TransCanada’s decision actually reinforces the findings of two recent reports for the Corporate Mapping Project by renowned earth scientist David Hughes pointing out that none of the current crop of proposed Canadian pipelines is needed, that they would not contribute anything to the economics of the oil sands overall, and that they are completely incompatible with the climate commitments made by the governments of Alberta and Canada domestically and internationally.

The fact that it was ultimately market conditions that undid Energy East is important for two reasons.

First, it highlights the hypocrisy of the political right who claim to believe that the market is never wrong yet are quick to blame government for not doing enough when the market makes decisions they don’t like. Second, it speaks to the role that decreased demand can play in stopping future expansions of fossil fuel infrastructure.

Yes, ongoing organizing and resistance are important, but if we can ultimately reach a point where demand for fossil fuels is actually dropping we may find more and more companies stepping away from new investments despite government cheerleading and subsidies. Let’s see what the battle over Trans Mountain holds for us in terms of lessons going forward.